Q1 2020 Earnings Call

Dead dead dead.

Good morning, and welcome to the core mining first quarter 2020 Financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal bulb specialist by pressing the star key followed by zero after today's presentation. There will be an opportunity to ask questions. Ask a question. You may press * then 1 on your touchtone phone and withdraw your question, please press * then two, please note this event is being recorded and now like to turn the conference over to Paul depart to director of investor relations, please go ahead.

Thank you and good morning. Welcome to core. My name's first quarter earnings conference call or results were released after yesterday's market close in a copy of the press release and slides are available on our website. I would like to find everyone that our press release slides and some of our comments today include forward-looking statements from which actual results May differ. Please review the cautionary statements included in our press release and presentation as well as the risk factors described in our first quarter 10-q in 2019. 10K now I'll turn it over to Mitch.

Thanks, Paul.

Joining me on the line are Tom Whalen and Terry Smith along with several other members of the management team.

Before discussing quarter. I'd like to provide a brief covid-19 update.

Since early March are two objectives for navigating through the impacts of This Global pandemic have been to protect the health and well-being of our fellow employees. Their families are contractors and our communities where we operate and to ensure the continuity of our business operations as best we can

To date we've had no positive covid-19 cases anywhere in the company early last month. We put a series of controls and procedures in place focused on controlling and limiting access to our operations thoroughly screening employees and visitors and reducing exposure and transmission risk through a range of social distancing protocols and sanitizing a cleaning procedures office employees are all working from home and non-essential travel has been eliminated.

We're continually reassessing these procedures as the situation evolves and as we gain additional information.

The level of Engagement support and Outreach by our employees to the communities in Western South Dakota Northern Nevada, Southeast, Alaska, Chihuahua, Mexico and British. Columbia has been truly inspiring slides 15 through 17 highlights several of the efforts being made by our employees in terms of business continuity are three us assets remain operation with minimal adjustments or disruptions are Palma real mine suspended operating and exploration activities in accordance with the decree issued by Mexico in late March them are silver tip operation in British Columbia safely suspended Mining and processing activities just ahead of the covid-19 outbreak and all ongoing site activities along with our scheduling program are continuing their

We remain in close contact with our suppliers and with our smelter and Refinery customers and we have not experienced any significant disruptions to date like many companies. We have taken steps to increase our frequency and methods of communication bolster our liquidity levels and be as prepared as possible for a wide range of potential scenarios going forward.

Overall, I think our strategy is serving as well during these unprecedented times.

Our focus on operating a balanced portfolio of assets located in North America with a particular focus on the US is helping us reduce our overall risk profile.

Our shift over the past several years toward more gold and less silver has removed a significant amount of volatility and has us well-positioned for the current environment our collection of organic growth projects offers investors compelling near medium and long-term growth and our commitment to a higher sustained level of exploration particularly near our existing assets provider stockholders with exposure to the upside potential associated with new discoveries and two opportunities for high-return mind Life Extensions from successful reserve and resource growth and finally got our us listing and location as well as our liquidity and access to Capital our key differentiators, especially during times like this.

Now turning to our results over.

For all the quarter was in line with our expectations mostly due to strong performances from Amarillo and our Kensington Gold Mine in Alaska, those two operations offset a lighter quarter from both in Rochester as anticipated both of which are expected to deliver stronger results during the remainder of the year. I mentioned our collection of growth projects the two most impactful neerja opportunities are the expansion of Rochester and a potential restart of silver tip.

Rochester we achieved a major Milestone on schedule for the POA 11:00 Expansion Project when we received the record of decision from the Bureau of Land Management last month, we planned to accept later this year and complete this important project by late 2022. We are also on track to issue an updated technical report in the fourth quarter incorporating and updated capital S optimize mind plan and economic analysis and it's silver tip a pre-feasibility study for a potential Mill expansion is now underway and we expect to have some results mid-year off.

The drilling program at Silver Tip kicked off last month and we remain optimistic about what this program will deliver and finally speaking of exploration other key elements of our 2020 exploration program the largest in our companies, ninety two year history are off to good starts the bulk of our near mine exploration investment during the first quarter went to Paul Mario and Kensington off. Well our single largest allocation of resources expansion drilling went to the Sterling and Crown deposits in Southern Nevada. We plan to provide a mid-year exploration update later this year given the size and importance of these programs for the company. And with that I'll go ahead and turn it over to Terry.

Thanks Mitch and good morning, everyone slide 6 highlights our production performance at each operation during the quarter and provides an outlook for the remainder of the year starting with Monday through increased by over 25% year-over-year and improved recovery rates from several optimization initiatives help Drive higher gold production quarter-over-quarter long as anticipated silver production decreased through the lower grades in our mind plan during the first quarter.

Higher gold recoveries and throughput along with the slightly higher gold price combined to generate over twenty million of free cash flow at Pomerado.

It's also worth pointing out that will be well-positioned to safely and efficiently ran back up. Once the suspension in Mexico is lifted.

Switching over the Rochester we mentioned on the last call that pressure production was hitting its stride early in the year. I'm happy to report that pressure performance during the quarter was 11% off on our Target and 33% higher than the fourth quarter we have now rebuilt momentum on our Leach bad that we lost late last year, but are not yet seen the benefit of improved or placement rates and restocked metal inventories as we were operating on deeper sections of the pad and the first quarter.

We expect production.

Can you improve during the second quarter and climb steadily through the remainder of the year?

Before moving on to Kensington all that some colors images earlier comments on our expansion plans at Rochester.

We plan to spend roughly 30 to 35 million on the expansion this year which includes a mix of procurement and early-stage Earthworks.

We have several purchase agreements already in place for long lead items including crushing and Process Equipment snc-lavalin are third-party eptm contractor has progressed cocktails design to around 50% completion today.

We also conducting a targeted drilling program, which we are optimistic will help us upgrade our mind plan as we work towards an updated technical report at the end of the year. I am switching over to Kensington production was on budget for the quarter as we saw a positive grade reconciliation from the Kensington main deposit financial performance remains strong as a good cause decreased by 5% two hundred nine hundred thirty dollars per ounce helping to generate just over 14 million in free cash flow during the quarter.

We were able to produce just over 2,500 ounces from jualan at an average grade of 0.33 miles per ton or eleven point three grams per ton and not expect you. I'll into account for 15 to 20% of kensingtons production for the full year.

We expect a slightly weaker. Second quarter due to fewer anticipated Valentine's but expect Kensington will deliver another strong year for the company.

At Wharf adverse weather in impacted first quarter pressure performance leading to weaker-than-expected production levels. We have mobilized a third-party contractor to accelerate our placement rates and help us catch up on and deliver on our full-year plan. As a reminder. We are planning to increase our strip throughout the year, but we expect them to revert to historical levels and twenty Twenty-One before passing the call over to Tom. I'd like to thank our Workforce for stepping up during this difficult.

We had a solid quarter of safety performance despite this additional time of stress and distraction. Please continue to be mindful and focus on the task at hand. We appreciate everything you are doing and your continued dedication to the company next song will cover the financial highlights for the quarter.

Thanks. Jerry has presented on slide ten. We have the very sound balance sheet with no near-term maturities and over 250 million dollars of liquidity.

With the improved margins are LTM ebitda increased 44% to $195 million versus a hundred thirty-five million just 12 months ago higher each month with our 2019 debt reduction initiatives led to total and net debt leverage ratios at the quarter-end of 1.8 * + 1.5 * respectively.

We've been

Completing various scenario planning analyses to consider the potential impacts of covid-19 on our business specifically focusing on liquidity.

From volatile gold and silver prices to estimating the impact of the temporary suspension at palmarejo and other potential downside scenarios. We have modeled numerous cases to determine a range Financial impacts.

We believe it is prudent to have a wide variety of options available to maximize our financial flexibility during these unprecedented times of volatility and uncertainty faith in our analysis. We've taken the following key actions to be well positioned under various potential downside scenarios. First. We've added foreign currency Hedges to lock in operating Cash Flow game relative to our budget. Secondly, we drew down an additional 100 million dollars after quarter end on a revolving credit facility third. We developed an internal list of opportunities where capex and exploration could be deferred and forth. We've also put a 100 million dollar at the market Equity program in place, which is available as a source of liquidity if needed.

Date, we have not begun the deferral of any capital projects or exploration Investments and would not expect to reduce these key internal growth initiatives. Unless certain downsides scenarios became likely off.

Looking at our financial results on Slide Five we expected the first quarter to be our weakest quarter of 2020 and are pleased to be ahead of our internal Budget on operating and free cash flow hedge. The numbers are first quarter results include $47 million dollars of adjust adjusted ebitda, which is a 79% improvement over q1 2019 wage strong kick off to our 2020 exploration programs and we had modest negative operating cash flow of eight million dollars, which was impacted by the timing of the annual wage, even d a tax the payment of the annual of our annual bonuses across the company and the build-up of inventory on the leach pads at Wharf in Rochester.

The temporary cessation of active Mining and processing activities at Silver Tip also had a notable impact on our queue 12020 results Silvertip used $32 of free cash during the quarter figure. We will expect will be much smaller going forward as the site focuses on exploration pre-feasibility work and ongoing maintenance activities. We forecast wage going carrying costs will be four point five million dollars per quarter down from the Six Million Dollar figure that we guided towards at the beginning of the year exploration and pre-feasibility costs remain in line with our previous estimates.

One additional note on Silver Tip given the precipitous drop in zinc and Lead prices during q1 twenty-twenty and the significant increase in The twenty20 Benchmark treatment charges for zinc and Lead concentrates, which were finalized during March 2020. We remain confident that the temporary cessation was a Sound Decision.

Before handing the call back to Mitch. I wanted to draw everyone's attention to slide eleven where we summarized our hedging program. We continue to take advantage of the stronger gold price by implementing additional price protection, you'll see that we've extended our zero-cost caller gold Hedges to cover a portion of our production in 2020 with a $1,600 floor as I mentioned earlier. We also laid some foreign currency Hedges over the next two years are hedging strategies designed to support cash flow generation and help fund key internal growth projects. Most notably the POA 11:00 extension Chester, which we anticipate funding with a combination of internally-generated cash flow and borrowings from our revolving credit facility. I'll now pass the call back to Mitch.

Thanks, Tom, just to quickly wrap up slide twelve hit several of our key priorities for the remainder of the year. Of course our top priority Remains the health of our employees their families and members of our commission says we continue to manage our way through the covid-19 crisis. We remain optimistic about our exploration programs and the results. We expect to see over the course of the Year. We're also looking forward in Rochester's production levels rise based on the higher crushing and placement rates. The team has been delivering all of us are excited about the operations future growth potential as a 11 is set up to gain momentum during the second half. I'm also enthusiastic about the work that is now underway on the pre-feasibility study at Silver Tip, and we look forward to sharing results with you later in the year.

And finally, we will continue to further improve upon our strong safety and environmental performance as we strive to deliver consistent operating and financial results.

Okay with that, let's go ahead and open it up for any questions.

We will now begin the question-and-answer session. Ask a question. You may press * then 1 on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys to withdraw your question, please press star and then to at this time. We will pause momentarily to assemble our roster.

Our first question will come from Michael dudas with vertical research Partners, please go ahead a good morning Mitch gentleman, and I'm glad to hear things are going safely and home everyone. Thanks. Mike good to hear from you.

So first question regarding Amarillo, maybe we could share some additional thoughts on expectations on you know, some of the government in the news we're hearing about life extension of the the covin situation what maybe other angles are being worked on down there to kind of alleviate that and how and for first and then secondly how quickly would you think you can ramp up once you get the green light and third what if some of the carrying costs that we should anticipate the in the queue to given the secession of the mining down there? Yeah. Sure. Thanks. Thanks Mike. I'll start and then Tom I'll I'll ask you to to step in as well just in terms of the overall status in Mexico just to rewind suck March 31st. The Mexican government issued the emergency decree, uh regarding restrictions on non-essential businesses. Um, and then we received

further clarification on

April 6th that made it clear that that precious metals mining was not an essential business according to the decree. So then on the 7th of April, we announced that we were going to be in the process of temporarily suspending operating activities at palmarejo that decree earlier this week was officially extended out to me 30th. However, there are areas with little covid-19 impact that will be allowed to reopen on May 18th and currently Palma radio sits in one of those those zones of of little to no covid-19 impact so we'll we'll we'll kind of circle the 18th of May but meanwhile on a kind of a separate path, we submitted an application for exemption to the decree under guidelines published by the undersecretary of mine's dead.

That's kind of a case-by-case process where they'll take the applications discuss it with the public health officials to determine whether or not uh mines can um can restart sooner than than those May May dates. So we'll keep pushing on on that angle as well as kind of gearing ourselves up for a restart kind of worst-case. Hopefully in the middle of of may, you know, kind of like the ramp down that takes two or three weeks. They'll be a a similar kind of two or three wage ramp up process to get ourselves back up and going when whenever we do get the Greenlight whether it's the 18th of May or or sooner. That's how we're kind of thinking about it in terms of impact and cost and obviously that that depends heavily on when we are able to restart so that we can measure you know, how how many days off

We were not not producing but Tom do you want to go into a another level of detail there as far as potential impact? Yeah. Sure. Yeah, I might as we talked about been thinking about tons of scenarios around this and and the number that I that I would use for a kind of a 30-day shutdown, which kind of feels like a best estimate at this stage be about ten million dollars, uh, in terms of less free cash flow for the year for Palmer of really wanting to grind into how we came up with that just bought an estimate of the 12th of the revenue lost. We think we can reduce our operating costs by about fifty percent obviously stop the drilling and they'll be less capex kind of to give you some numbers about how how to get to that ten million, but the other thing I would just remind everybody is that I mean the peso is really devalued here.

and as mentioned

We put on some Hedges the the peso about fifty to sixty percent of our costs are denominated a Mexican peso. So with those Hedges, we've kind of locked in roughly the same amount of lost free cash flow from operations. So anyway, just to give you a sense will come back with obviously a clear picture as cute too, but hopefully that gives you some some numbers play around with Tom. That's perfect. Thank you. Thank you for the thoughts on that and hopefully the 18th is sooner rather than than later. Second question is turning off Kensington. So so I just just to clarify so it sounds like second half you're going to a lot more or processed through would you draw in Long Island? So that is that mix going to be a says fifteen twenty percent. Is that over the 12-month period or so therefore would be maybe a much higher mix in the second half of the year that I should think about it.

That's right. First quarter. Terry remind me what it was single digits great in terms out contribution and a lot of that might had to do back covid-19 in terms of Workforce availability, uh, you know, a decent amount of our Workforce at Kensington flies up from the lower Forty-Eight to work. They're they're scheduled rotations and that has impacted in the first quarter in in particular March availability of workers in do Allen. And so that is a reason why we were a little lower in the first quarter than than we expect to be in subsequent quarters. I kind of look at as a as a positive that with only 9% or whatever of off of the tons coming from Joel and it had a great a great quarter on its own. So hopefully with a little bit higher contribution through the rest of the year. We'll see see the birth

Let's reflect that.

But that's great. I appreciate that point. You just finally maybe back to Terry on the on the scenario analysis, or maybe the hedging part. So I assume since you've been predicting through this page program on on gold over the last few quarters. You're going to continue think through that as the markets move forward and with with higher collar balances. I would assume home and from a from a guess on this narrow concept looking at the potential spend on you know, the the ferals and such it seems it seems like you feel like you have an accordion to kind of crush through this and not have to defer some of the some of the important work that you're doing. But what would it be just price change or concerns about that or Elmer would be out for several months. Would that be some of the the negative scenarios that would would impact that? Yeah, I'll start and then you can you can chime in with our thoughts on the on the market and the and the hedges

Program that we've been carrying out, you know having a $1,600 floor under a good chunk of our goal production goes a long way.

Uh toward helping to ensure that that we've got sufficient, um cash flow from Rochester and elsewhere to to fund fund that Expansion Project. Yeah, that that's a project that doesn't have a lot of room to be deferred or moved because as we stack on the stage for leetch bad, you know, there's a point at which that pad is full and I need to have this new pad ugh down and ready to start stacking on and that is is sort of late 2022. So, you know, we're we're working on on that on that basis and on that schedule in between our our our revolver and cash flow, especially feeling better about that downside of 1600 gives us a lot of comfort that that that's sufficient. Now if if Mexico continues on you know more longer than what we all hope and expect you know, that that off.

Makes the numbers obviously a little bit tighter, but we still feel comfortable that will will have sufficient liquidity, you know, and then and then just Mike on separate separate but related point, you know, I'm a silver tip and the the pre-feasibility study and the potential, you know scenario of a restart. You know, that's a project that we have a lot of flexibility on in terms of if and when we would ever pursue that and so obviously we're thinking through and mindful of not only relative Returns on these projects. But you know, how do they sequence and slot in to talk to our financial capacity to to deliver on them and but Rochester is clearly the the one that has the the highest priority.

Tom anything on the hedging that you want to add. Yeah. I just I Creator eight minutes that $1,600 floor is is definitely a Target and the the beauty of doing it in layering is you know, we're not trying to to time the market and and obviously where the more patient you are the higher the same we're able to achieve and just just as a reminder. I mean in in March we did see gold drop below 1500 and and silver went below 12:00. So Monday, we definitely want to protect that the downside to ensure that we've got sufficient funding for for a 11 as as Mitch mentioned. I mean that that that timing is off. We really don't have that much flexibility to move around that Capital spend.

Appreciate all the thoughts Gentlemen, please. Stay healthy you to Mike. Thanks. Take care.

Next question will come from Joseph regular with Roth Capital Partners, please go ahead morning guys. Thanks for taking my questions. Hi Joe home. So I guess first thing, you know thinking about the the scenario with Rochester with with building out the the additional Leach pads. Would you need to have all like the capital to do that in hand off when you embarked on that or is that something where you know, you can kind of have a certain portion day 1 it would make you feel comfortable.

Yeah, I think.

It's it's uh, the latter Joe in terms of you know, we'd have the revolver balance day one, but with the cash flow from Rochester and then from the other operations that of course we'll will come over time, you know during 2021 and 2022 to act as a another key source of of the funding so that would come sort of as we as we go Tommy anything to add to that.

No, even nailed it again. We Joe. We think we've got between the internally generated free cash flow from from our minds as well as the Roberta passivity based on the scenarios that we run. We're feeling pretty good about our our ability to to find the 11.

Okay, also Rochester, you know a big portion of kind of the decline in production. There has been related to tonnage off and then you know that step back up in q1, but that probably won't flow through till 2 just as you rebuild inventory, but is there any difference in the or make up from same it'd last year to now. Like are you guys experienced any changes even though maybe the model says it should be fine. But like is there anything else geologically different about the or that you're binding today?

Here you want to cover that?

Hi Joe. Yeah, thanks for the question know there's nothing significantly different over that time period that you're you're thinking about life one of the things that we benefit from Rochester is is just uniformity. I think there's some differences in terms of hardness. You know, we we see uh, uh drilling differences and crushing impacts from from hardness, but nothing, you know geologically or or mineral logically that is is different.

Okay, so given that and given you know, my layman's terms understanding of the high-pressure grinding you're doing there's really nothing but time standing between you guys and getting to where you want to be.

I think that's fair, you know every time we put hpg are crushed or on or near liner. We we see the kind of recovery results that all the tests work had had indicated. So that's that's certainly comforting and validating. It's really about the the timing like you said, Joe of educating not only ounces down through deeper sections of of that stage four Pad, but building up that that tonnage those stacking rates and placement rates that the guys out there have done a good job of re-establishing in large part. The is black blasting and the pit has gone a long way toward helping improve the crusher performance, but we're we like what we see at h p g r and you're right. It's a it's more of a Time function of time than anything.

okay, I just wanted to

Confirm and cross all the t's, you know one last one just at Silvertip. Are there any remaining payments or did you guys make the final contingent payments in q1 Thursday? We made that no more now to go.

Okay, great. I'll turn it over. Thanks guys.

I don't know if you have a question. It's started on one task question * then 1 if you have a question.

Our next question will come from Brian MacArthur with Raymond James, please go ahead.

Good morning. I have three quick questions just back to Tom's point about layering. You said you had $99,000 in 2021. And then the press release just sort of give us fifty six and half thousand with the first half and the second half. Can I assume those other ounces? We're sort of layered in in the first half in the second half equally.

Tom you want to cover that?

Yes is the answer is probably a little bit more waiting to the to the first half of the year, but the goal would be to have them spread out evenly off, uh when we complete the program.

Okay, great. It's just they're only $56. You kindly gave us $56,000 to the price is in a press release and I saw you got up to ninety nine as you said in your presentation on a second thing just a hundred million drawn the revolver. I mean I get it if you draw 200 you're going to pay more and fees or whatever. Is there any I assume that a hundred million sort of, you know in the context of guaranteeing cash to finance Rochester obviously need one of a buffer just in case things didn't go wrong. Is that kind of just the way it came up with a hundred? You did all your testing you made an analysis and Hunter sort of seemed like the right number and I mean you could have taken I I presume a hundred and fifty or two hundred and maxed it out. And then you'd had more cash on the balance sheet. Is that kind of the thinking that went into where the hundred million came from your on the road? Definitely on the right track there Tom you want to

Provide. Yeah. Yeah. Thanks Brian. Let's see, you know, we went through a bunch of different scenarios and and the last month. So a couple of comments one is this is a different crisis than 08. It's not a a a banking crisis. It's a economic crisis. So, you know, we chatted with all the banks and just make sure that there was no restrictions to be able to draw on the revolver. And so this had nothing to do with that but it was just we thought a a precautionary measure just to make sure that we had some cash on hand if if some of these downsides scenarios were were to work to come together. I mean the hope is that we'll we'll never need to draw on it again. I just reiterate as long as this moment. We have no intentions to uh, stop any capex or exploration again at $1,700 goal. We're feeling actually pretty pretty good but last name

want to do is rest on your laurels and get

Cut short in a time like this. We've never seen an X like this and so we just thought it was The Prudent thing to do.

Yeah, it makes total sense. And a lot of other companies have done that too. I just I figured that's where that number came from as opposed to say. I mean I could argue just to be really sure you take the whole two hundred million I guess is the debate. Yeah, we just strangest to we also thought again, you know, we've talked about all the responses that our our response to covid-19 off and we just didn't think drawing all of it was commensurate with with all of the risk mitigation that has happened and we thought it would probably send the wrong signal the wrong with her as you point out. We could have done the whole thing, but they just didn't feel right to us.

Not make sense. And I guess I just my third question just with silver tip. And as you mentioned with you know tcrc the big prices down you put in the final payment of $25 million bucks. You know, I guess the stress testing for write down. What's the general thought process on on on that? I assume you're going to wait until you get the New Jersey study cuz then you sort of have a adjusted long-term plan is or it maybe you don't need to do what I'm not saying you do your don't I was just kind of curious whether that had to be stress-tested this quarter.

You want to cover that please? Sure. Yeah, again the assumptions that we used in the impairment analysis contemplated a recession in 2022. And so again looking at to where long-term prices would be I think it was disclosed in the the 10K what we used in terms of zinc oxide prices sort of back to more long-term. And so again what whatever happens to the zinc and Lead price here over the next uh, 18 months is not going to impact the the amount of down payment.

Great. Thank you both very much. I appreciate it. That was very helpful. Thanks, Brian. Take care.

Our next question will come from Adam Graff would be Riley FBR, please go ahead. Thanks guys. Just a couple of quick questions. Yeah Rochester that you guys are are targeting for the end of the year. Can you just remind us if if that's going to include a Lincoln or or wheel clock Wilcock or Wilcox or is that the the the next study for Rochester?

No. Hi Adam. It's Mitch to the plan would be updated capital and then a mine plan that would be optimized and expanded to hopefully include some of those East Rochester ounces. That's it underneath the Old Stage 1 and Stage 2 pads and then some additional material from Lincoln Hills, but nothing from Wilco or goldridge further to the west of of Lincoln Hill.

God

And then can you guys just give us maybe some color on any any progress in the first quarter exploration at preciosa, and it's Sterling in Crown?

Yeah, do you want to cover that Adam La preciosa continues with the engineers looking at our updated geologic and resource mod, actually a meeting at the end of next week will review it. So sometime in May we'll have a much better idea what we're going to do their job the crown and Sterling projects started out with three rigs turning to up at the crown area one down at Sterling. The crown area had a large truck brake is wage testimony geophysical Target because of the success of that Target. Now, we've moved our smaller RC rig up there and continue drilling on this target. It's off seahorse. Not sure if we've shown that any of our Maps, but it's up about a mile and a half north of the s m a resource in in an area that was were no prior drilling was it's a Jeep

Physical Target. Um, so we've been quite busy with one leg up there. We sent the truck rigged home and we're continuing to draw around the Sterling area at Sterling will not move a Corrigan, um starting on Sunday and the core rig will start doing the in sale large-diameter core that we're going a little article work engineering work and look at a pic design at at Sterling itself. Both crown and Sterling have had some nice upside hits in the drill results, which we often talk about mid-year updates in places. We didn't expect so these will be used to be results that I can disclose and we put that news release out and hopefully by that news release will have something around between five and ten goals to report in those new zones. So it's it's going really well, Sterling.

And just in terms of the you know, the biggest components of the program this year Amarillo and Kensington. Obviously Amarillo right now is dead drills aren't turning but we have 10 rigs they're ready to get back into.

in the action and so we're looking forward to that that program and the results from their Kensington also will have some good good results to talk about in a year mid-year update and then Rochester and and

And War for both more kind of middle to the second half of the Year waited. So we got a lot of good things going on in a lot of a lot of places. Yeah silver to just got started off the mid mid to end of March and is up to three rigs now, we'll have five rigs by the middle of second-quarter visually things are looking really good there too long. Can you remind us at palmarejo is the focus more resource conversion or resource expansion?

Charlie out the year with a bit more resource conversion just because of our annual resources and reserves calculations. Typically, we have a data cut off end of June. So if you look at the the money spent and feet drilled or meters drilled there a bit more in the infill reserve resource conversion category right now. However, it's super important that we find some new games new quavo's to expand into in a couple of years. And so you'll see for the remainder of the year that the focus will be dominant life expansion and we're finding some some interesting-looking stuff that we're going to end up like mixing that 10 rigs queued up to to start up and aggressively drilling some new areas north of independencia and east of independencia where we've got some good intercepts. We'll talk about in the middle report.

Great. Thank you guys.

This concludes our question-and-answer session. I would like to turn the conference back over to Mitchell Krebs for any closing remarks. Well, we appreciate everyone's time this morning, and we look forward to speaking with you again in the summer when things are hopefully returning to normal to discuss our second quarter results. In the meantime. I hope you all stay healthy and and safe and thanks again for your time by.

The conference has now concluded thank you for attending today's presentation. You may now disconnect.